Asian shares retreat; dollar breaks fall

Asian shares retreat; dollar breaks fall

Hong-Kong: Asian stocks retreated from 13-month highs on Friday as a conflicting picture about the US economic recovery’s strength stopped investors from extending this week’s rally, but gave some respite to a battered dollar.

Investors in Japan were cautious ahead of a stretch of public holidays early next week though Bank of Japan deputy governor Hirohide Yamaguchi said a positive business cycle was starting and signalled the central bank could soon withdraw emergency support for corporate funding. “A pickup in the global economy is expected to continue for some time," he told a forum in Tokyo.

The Nikkei index fell 0.7%, breaking a three-day rally.

Shares in Shanghai fell at least 3% as investors fretted about the prospect of a sharp rise in shares from upcoming initial public offerings (IPOs) and worried that recent gains may be overdone.

Stock market jitters took pressure off the dollar, which held above one-year lows reached on Thursday against a basket of currencies, though analysts said its respite could be temporary. “We are seeing a bit of a pullback but the broader US dollar weakness remains intact as it turns to be the currency for carry trades," said Jonathan Cavenagh, currency strategist at Westpac in Australia.

The dollar firmed against the yen after Japanese finance minister Hirohisa Fujii said he did not want to be perceived as backing a strong yen. The dollar rose as high as 91.47 yen, according to Reuters data, extending gains after the comments to trade 0.3% higher.

Investors across Asia stood back after equities hit their highest level in 13 months on Thursday. While there is growing confidence the global economy is on an uptrend, there is uncertainty about the strength of that recovery.

Data on Thursday showed US housing starts hit their highest level last month since November, but a rise in the number of Americans drawing long-term unemployment compensation tempered optimism for a sharp rebound in the world’s biggest economy.

The MSCI index of Asia Pacific stocks traded outside Japan dipped about half a percent. The regional gauge has surged 80% since mid-March.